Press Report : Phoenix Four summoned to Commons enquiry

The four former MG Rover Directors criticised for their management of the carmaker vowed to clear their name last night after being summoned to explain themselves to a Commons inquiry. MPs have called on the Phoenix Four, who received nearly £36 million in pay and pensions from the carmaker, to explain the findings of a damning report into their handling of the Longbridge firm, which collapsed with the loss of 6,500 jobs.

The Business, Innovation and Skills Committee, chaired by Worcestershire MP Peter Luff, has written to the former Rover directors ordering them to give evidence. The Committee does, if necessary, have the power to compel witnesses to appear before it.

A spokesman for the Directors said they welcome the chance to clear their names and explain why many of the allegations against them were untrue. As an official House of Commons body, the Committee’s hearings are also exempt from most forms of legal action, meaning that MPs and witnesses can speak without falling foul of libel laws.

The Phoenix Directors – Peter Beale, John Edwards, Nick Stephenson and John Towers – will therefore be able to put their side of the story in full. They have previously claimed that the Government undermined their efforts to save the carmaker, and contributed to its collapse in 2005.

A spokesman for the four said: “There are statements in the Inspector’s Report that they would take strong issue with. They will be happy to make the true picture very clear to the committee. They had been expecting that a hearing like this might be called.”

There are statements in the Inspector’s Report that they would take strong issue with. They will be happy to make the true picture very clear to the committee. They had been expecting that a hearing like this might be called.” A spokesman for the Phoenix Four

However, the Directors are likely to receive a rough ride from the Committee, which also includes local MPs Julie Kirkbride (Con. Bromsgrove) and Adrian Bailey (Lab. West Bromwich West). Last month, they were accused of giving themselves “unreasonably large” payouts, in a report by Government-appointed Inspectors.

The MPs are likely to focus particularly on the Inspectors’ finding that MG Rover Directors provided them with “inaccurate and misleading explanations” about the way the business was managed, at an earlier inquiry.

The 830-page report, which took four years to produce at a cost of £16 million, also found that Mr Beale had misled Birmingham MP Richard Burden (Lab. Northfield), whose constituency included the Longbridge plant, over the acquisition of the Rover loan book by the Phoenix Directors. It revealed that Mr Stephenson paid more than £1.6 million to a Chinese consultant identified as Dr Li, with whom he had a “personal relationship”and it revealed that Mr Beale bought software to “clean” data from his computer, after investigators were appointed.

However, although the report contained little criticism of the Government, it did warn that special advisers had briefed the media that Rover was in trouble. While the Inspectors concluded that this made little difference to the firm’s eventual fate, Conservatives and the Rover Directors both claim that spin doctor leaks helped destroy confidence in the business and so hastened its demise.

Phoenix Venture Holdings bought Rover from BMW for £10 in 2000 but the business’ long-term survival depended on finding a partner for a joint venture and this never took place. The business ran out of money in 2005.

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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5 Comments

“However, the Directors are likely to receive a rough ride from the Committee, which also includes local MPs Julie Kirkbride (Con. Bromsgrove) and Adrian Bailey (Lab. West Bromwich West).”

Yes, the towering intellect of Julie Kirkbride (didn’t think for one moment that it was wrong to double her expenses claims with her MP husband) and the great business brain of Adrian Bailey (able to call on his experience as an Assistant Librarian) are going to be as effective as two dead sheep given that Incinerated Four will have been tutored up by top QC.

It doesn’t say here but are they calling highly experienced Antique Dealer Kevin Howe before them to explain how every critical business decision and opportunity was botched or missed?

I welcome this news as there has clearly been a lot of political spin with this whole sorry saga and it is time that ALL evidence was presented, not merely the bits of evidence sifted through, some of which was discarded for this report. Now is the time for the Phoenix Four to present their evidence relating to the findings of the report so that a more accurate and balanced conclusion can be made about what caused the demise of Britain’s largest volume car manufacturer.

I can only hope that the Commons Committee takes into account the state of the former Rover Group after six years of hopeless management and negative PR by their former keeper BMW as well the complexities of running a major motor manufacturer such as MG Rover – the Committee needs to go beyond merely the accountancy procedures the 830-page DBIS Inspectors’ report was based on.

It’s a simple answer to say that, under pressure from the Government and Unions, BMW Group sold Rover Group to the wrong people.

However, was BMW management so bad? BMW managed to put in place two state of the art manufacturing facilities for the Freelander and 75, turn Gaydon from what was effectively, under BAe Systems, an empty shell face-lifting Hondas into a state of the art design facility and all but finish a state of the art engine facility at Hams Hall in the 6 years. Then we have the work that the BMW management teams pushed through on the MINI and the current Range Rover which reflected them recognising the need to take control after they saw where Towers was taking them with the 75.

The weakest link in the chain during BMW’s ownership was still having Towers and his team at the top in the critical early years – they were responsible for prioritising the replacement of the 600/800, which put the company directly in conflict with the BMW 3-Series (a case of biting the hand that feeds you if ever their was), and not looking to compliment the BMW range with the future models.

I suspect that decision had more to do with getting a nice little package to be asked to walk away with than any commercial sense…

Interesting views. There were certainly some good points about BMW’s ownership of Rover (I would not dispute that so casually as you have highlighted the Freelander and Rover 75, to name but a few).

However, to give Mr Towers credit where it is due, he did recognise and encourage the development of some of the niche market offerings that enabled the Rover brand to raise its level of aspirational appeal and pave the way forward for the return of MG. These contributed to Rover’s financial success in the early Nineties and saw the profile of the Rover brand itself at its most prominent level for nearly two decades.

BMW’s slow pace in taking charge of Rover Group (Mr Towers left in June 1996), the quality control issues which were so prevalent on the Freelander for much of its life, the failure to permit the Rover and MG brands the opportunities to develop the much needed ‘halo’ models they so desperately needed (because they would have posed a greater threat to BMW’s own models), together with the huge commercial damage Herr Pischetsrieder did at the launch of the new Rover 75, were all evidence that BMW did not get to grips with the real needs of Rover Group.

BMW’s expectations for Rover and the cross-sharing of components and manufacturing practises, were too optimistic in the time period they envisaged. Replacing the profitable 800 was definitely a priority, but so was developing the new R30 medium model.

Clearly turning a profitable company such as Rover into a near consistent loss making concern (under German accounting standards) must beg the question of WHY? From the chronic under-investment during the BAe era of the early Nineties, the increasing reliance on Honda and licensing agreements limiting Rover’s freedom to develop the sort of models it knew its customers wanted, to the many issues affecting the company under BMW’s ownership, the causes of car making at Longbridge’s decline stem back before the moment when John Towers returned in 2000.

I agree with you that the problems stem far back before BMW and Towers.

However, the simple fact is that, apart from 10 quid, Towers brought nothing to the table other than a quick fix solution for the Unions and Politicians. The Government, having refused to provide the relatively small assistance sought for the re-development of Longbridge, should have stood aside and allowed BMW to sell the operation to the Alchemy Partnership which recognised that a significant investment would be needed before the business could be sold and had access to the sort of funds required.

The Flammable Four, in return for their 10 quid, helped themselves to the finance book and paid themselves large salaries which were out of all proportion to their previous earnings. The only significant achievement during their tenure appears to be the bedding of young lady from the Chinese Communist Aristocracy although she was apparently £1.7m up at the end of the relationship. But I am sure she was good and worth every last penny.

Had the Flammable Four put their houses on the line, had Towers spent less time at the Golf Club and had they put some real effort into the Fiat Stilo deal amongst other things, then they might have justified the salaries they paid themselves and deserved some respect but they didn’t so they don’t.

What I really don’t like about the Business, Innovation and Skills Committee’s inquiry, and I think we agree on this, is that it will be limited to the time of the Flammable Four. Instead, the Committee should look at the logic of the refusal to assist BMW Group with a £200 million grant to make the Longbridge plant competitive with a Green Field development and the decision by the Government to favour Towers and his merry men over the Alchemy proposal.

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